ITALY Law and Practice Contributed by: Francesco Dialti, Vincenzo Cimmino, Valentina Bombino and Lucrezia Ghezzi, CBA Studio legale e tributario
rities (which can also be issued in different tranches or classes) and may also involve, under certain condi- tions, the granting of loans. As an alternative to direct lending, a possible structure (which is being used more and more frequently) is the subscription by investors of bonds issued by Italian companies. Historically, the issuance of bonds by Italian compa- nies was subject to numerous legal requirements. However, since Law Decree No 83 of 2012 first intro- duced the “mini bond” instrument in the Italian legal framework, the situation has dramatically improved. Originally, the new instrument was intended to primar- ily boost the growth of companies which did not have access to traditional banking credit. Over the years, the development of specialised players has made this a very popular instrument in the Italian market. As a general note, however, Italian borrowers still tend to prefer (where available) bank financing due to: • lower interest rates and generally more favourable pricing; and • greater flexibility in managing any waivers or amendments to the finance documents and, accordingly, lower costs in this respect. Another trend the Italian market is currently experienc- ing is the increased number real estate securitisation transactions. This type of securitisation was made possible by a rel- atively recent amendment (effective since May 2019) to Law No 130 of 30 April 1999 on securitisation (the “Italian Securitisation Law”), which allows the secu- ritisation of proceeds deriving from real estate assets and registered movable assets. However, it took a few years for this financing technique to become popular. Italian special purpose vehicles (“7.2 SPVs”) are legally permitted to acquire and manage real estate and registered movable assets (and any rights relat- ing thereto) together with the receivables arising from such portfolios of assets. The subscription price of
the notes issued by the 7.2 SPV will be used to fund the purchase price of the assets within the real estate securitisation. In line with the general principle of the Italian Securitisation Law, the assets of the SPV are automatically segregated by operation of law for the benefit of the noteholders. This financing technique is increasingly being used, inter alia, to finance real estate developments. 1.6 ESG/Sustainability-Linked Lending In line with the growing global demand for sustain- able finance, there has been an increase in ESG or sustainability-linked financing transactions in Italy in recent years, especially in the industrial sector. ESG metrics are, in particular, taking a major role both in the financial risk valuations and in the remuneration of the risk capital: a discount on the margin levels is granted to those companies which meet some ESG target metrics. 2. Authorisation 2.1 Providing Financing to a Company In the Italian legal system, as opposed to other legal systems, the principle of reserve of financing activity applies. This principle is established in Article 106, paragraph 1, of Legislative Decree No 385/93 (the “Consolidated Banking Law”), which reserves the exercise of financing activity in any form, in addition to banks, to authorised financial intermediaries reg- istered with a special register held with the Bank of Italy. A breach of this provision will also be subject to penalties under Italian criminal law. However, in recent years, changes to the regulatory and tax framework have been implemented to provide financing alternatives to traditional bank financing, so that insurers, Italian securitisation vehicles (ie, com- panies established pursuant to the Italian Securitisa- tion Law) and alternative investment funds may also engage in direct lending to Italian borrowers. Pursuant to Article 106, paragraph 3 of the Consoli- dated Banking Law, the Minister for the Economy and Finance, having consulted with Bank of Italy, shall specify the content of the lending activities, as well
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